Steamboat Springs  Steamboat Ski and Resort Corp. announced on Tuesday the 2011-12 ski season winter air service program for Yampa Valley Regional Airport. The good news: a 4 percent increase in available passenger seats compared with the 2010-11 program. The bad news: the 122,700 seats still represent a 25 percent decrease from what was available to potential visitors just a few years ago.

The winter air program is essential to the vitality of ski season tourism in Steamboat Springs. We’re a destination resort, meaning the majority of our visitors make a concerted effort to travel to Northwest Colorado for a vacation. We simply don’t generate the Front Range skier days typical of Interstate 70 resorts like Breckenridge and Vail. Providing commercial air service from key destination markets to YVRA throughout the winter gets people onto the slopes and into our hotels, restaurants and shops. An absence of flights means an absence of tourists, and we all know how that impacts our city and the local economy.

The Steamboat Springs City Council last week approved the first reading of an ordinance that would put to voters a new 0.25 percent sales tax to help underwrite the winter air program. We imagine the council will make it official next week by passing the second and final reading of the ordinance. As well they should.

Voter reaction to the proposed sales tax, which would sunset after five years, is a far riskier proposition, and one we hope the architects of the ballot question don’t underestimate. Any tax is a difficult sell given the continued state of the economy. Adding to the challenge facing air program tax supporters is how to educate and convince voters on the merits of the program and what is likely to happen if it goes away. Put simply, the airline program entices airlines to bring jets into YVRA all winter long by guaranteeing each airline a certain amount of revenue for the flights. When the revenues generated by ticket sales and fares don’t match what the resort community guaranteed, the program foots the bill for the difference. That bill has grown in recent years, which has resulted in the dwindling away of the airline program’s reserves. Those reserves are estimated to be gone by the end of the 2012-13 ski season.

We fully support the airline program, and we understand its significance to bringing visitors to the valley during ski season. It also results in more flight options out of Hayden for full-time and part-time residents.

However, we’re not convinced that the 0.25 percent sales tax is the best means for providing the necessary additional funding for the program. Ski Corp. and the Local Marketing District’s 2 percent lodging tax currently fund 96 percent of the program. The remaining 4 percent comes from businesses that donate to the Fly Steamboat program. It might be a mistake not to instead explore a 1 percent increase on the Local Marketing District’s tax.

Fortunately, there’s still time for a community discussion about the airline program and how best to fund it before the Nov. 1 election results are tallied. Supporters of the 0.25 percent tax certainly have their work cut out.

Yet another article on the topic that fails to mention the issue of empty seats. If the seats were filled then the needed subsidy would be greatly reduced.

You'd never know it from the recent coverage of this issue, but there were years in which the airline subsidy ended up costng less than expected because they filled the seats. (So then they added too many extra flights the next year and so had lots of empty seats and consumed the previous year's surplus).

It all comes down to how much is it worth to spend to get an extra tourist to come to SB. If Ski Corp is paying the subsidy to bring the tourist in on one of their packages then not so much. If it is the general public paying via a sales tax hike then quite a bit more.

For .25% and a million dollars or so per year then we could build the A1 rec center or whatever amenity that makes SB a nicer place to visit AND a nicer place to live. Or we can spend it to subsidize empty airline seats.

3canines, I happen to agree with you on our resort pricing at the moment. In my humble opinion we have priced ourselves out of the "family friendly" market that we strive so hard to be. Lift ticket prices are comparable to Aspen, and I personally do not think that is very Steamboat. But the market is going to have to send that message... and the resort is going to have to listen.

But as for the air program, I do think this program is vital to our success as a resort community, and we are not the only community struggling with this very dilemna. Our guests indicate over and over in surveys that having direct air service to Hayden is VERY important to their decision to vacation here or buy property here. Our business and location neutrals tell us that the Hayden airport is also crucial to their decisions to locate in our community.

To Scott's point about subsidizing empty seats, because of the nature of the market we serve, you will never see load factors like you do on a DC-NY commuter. Weekend flights may be at capacity where midweek are not, and that has more to do with how people vacation then a failure to fill the seats. The airlines are looking at committing their inventory to a specific route for the season, not just the weekends. If we could fill every seat every day of the week for the entire season, we would not be having this discussion at all.

Air service to Hayden benefits us all, not just the resort, or the lodging community. I hope we have seen the bottom of this economic downturn, but who can be sure? I think it makes sense to put our community in the best position possible to insure we can continue to see our tourism economy rebound, and to make sure that we can continue to attract the location neutrals who can choose our community for our quality of life.

But there are several reasons why a .25% sales tax works better than trying to leverage further funding from new lodging taxes and fees:

1) The lodging business is already struggling, & the taxes/fess our guests currently pay on top of their lodging bill are shocking. Lodging revenues are down due to over-supply. There are more rental units than there are visitors, and this fact drives prices down across the board. As prices go down, so does revenue, and so do the taxes & fees that are a % of revenue. How can we expect more funding from a single industry that is already in a downward spiral?

2) There are a vast number of people who enjoy the benefits of the air program, but do not contribute to it. The fact is, if you don't pay for lodging, you don't financially contribute to the air program. Second homeowners visiting their Steamboat property, timeshares/vacation clubs, local business travelers, and couch surfers all tie up seats, but don't contribute.

3) There are a vast number of people who fund the air program, but do not enjoy its benefits. People who drive to Steamboat and rents lodging financially supports the air program.

4) We as a community ALL depend on the air program, and we ALL should share the burden of its funding. By funding a sales tax versus a lodging tax, our air program gets funding from anyone transacting any kind of business, rather than a few people transacting a single type of business.

5) The cost of a Steamboat Vacation is too expensive, and our problem as a destination is pricing ourselves out of the market, without little to offer in terms of new amenities, trails, lifts, etc. The lodging industry is not responsible for this. Lodging companies are dealing with lower revenues, lower average daily rates, and lower lengths of stays. And shorter stays mean units have to be cleaned more frequently, which increases their operating costs.

Aside from great snow, our Hayden air service is our most important competitive advantage over other ski destinations. If we screw up the winter air program, this will have dramatic, negative, and long-term effects on every single one of us.

People - It's 25 cents on per $100 transaction. Hey buddy...can you spare some change?

One last note:

We found a way to make it easy for businesses to voluntarily contribute to air service. (Fly Steamboat) Why can't we set up a fund for individuals to make voluntary contributions to air service funding? I have informally surveyed a variety of second homeowners over the past year, and nearly all have indicated they would gladly throw some money towards the program if the option even existed. Convenient air service is a big part of why they bought their real estate. Setting up the fund so that contributions are tax-deductible would probably increase donations dramatically.

"To Scott's point about subsidizing empty seats, because of the nature of the market we serve, you will never see load factors like you do on a DC-NY commuter."

I never suggested that we should expect load factors comparable to a prime commuter flight. All I am noting is that CURRENT load factors is worse that PREVIOUS load factors, but I acknowledge I don't have the exact numbers in front of me.

And those are such an inconvenient facts that neither the paper or the City Council is willing to mention them. Oh well, I guess I need to submit an open records request to get them.

The airline program is actually subsidizing our way of life in Steamboat and our entire local economy.

Without tourists coming to Steamboat, the vast majority of local businesses will fail, sooner or later. There would be a economic ripple effect that will shake most local households right off their financial foundations.

Retail, Dining, Recreational, & Lodging

If you don't subscribe to the notion that the above industries are at the absolute core of our entire local economy, you probably shouldn't waste your time reading any further.

If we lose the ability to bring visitors to the valley, these core businesses will eventually fail.

The employees of these businesses will lose jobs, and therefore spend less locally on goods and services.

The businesses that provide B-2-B services (accounting, legal, repairs, and other services) will also fail eventually.

There will be a massive loss in sales tax revenue, and the city will be forced to make cuts.

City services and Public Safety will be reduced.

The loss of business and jobs will drive property values down dramatically. The construction industry will be brought to its knees.

The loss in property values will impact property tax revenue, which funds county services and schools.

Those fortunate households that can find a way to survive the crisis will realize Steamboat isn't the paradise they used to know and love, and they'll move on to somewhere else that can provide better opportunities, better services, and better schools for their families.

The last remaining customers will make a mass exodus from the valley.

If we lose our air service, we will be dealing with Economic Armageddon in Steamboat Springs.

The answer is not by increasing lodging fees.

If you don't believe a sales tax equal to 25 cents on $100, then what is your answer.

Thank you, Jon, for "tiptoeing" around the issue that has griped many in this community for years--calling out the ski corp for their pricing policies, especially in these national/local economic times and considering the condition of the base area and on mountain amenities!! This affects not only the guests but the locals as well.

But the airline subsidy costs money because of EMPTY seats. 30% empty is not simply explained away by saying busy weekends are balanced by slower midweek because that'd require nearly empty midweek flights. It is simply poor management of an expensive resource to have only 70% occupied.

Refusing to spend more money on the airline subsidy program is not the end of flights to SB. It simply limits the program's ability to schedule flights with empty seats. Since the current program is able to pay for 118,000 seats with 35,000 empty then his sales tax hike will presumably allow the airline subsidy program to have about 50,000 empty seats a year. Woohoo, isn't that a brilliant useful way to spend public tax dollars!

Nor would even the end of airline flights be the end of SB tourism. Something like 20% of winter tourists arrive by air. Even assuming none of them would find alternative transportation, the recession caused a bigger drop in tourism that than and SB survived.

Anyone bother to compare what SB pays in airline subsidizes vs Vail's airline subsidy program? According to their marketing group, Vail Resorts pays 100% of their winter program which costs them between $350,000K and $1M. And they have many more flights than SB which spends more money. Why is their program more cost effective? Because Vail Resorts does a better job filling their planes.

So despite the paper's, City Council and Chamber's best efforts to hide the truth, the truth is that there is an alternative to approving a sales tax to pay for additional empty seats.

Just had a crazy thought, if flying into Hayden is so important to local businesses locating here and is so important for tourists upon which local businesses are so dependent then there is a perfect solution. It should be a property tax because the Gallagher Amendment's higher rate of taxation on commercial property. And residents would pay a far smaller amount which is fair because they receive much less of the benefits of the airline subsidy program.

If businesses agree it is so important then surely they would all support paying for it via a property tax.

Vanguy,
Toned down from armageddon to serious problem, I can roughly agree with your posts. We do have other industries here. The Denver flights would solidify and cheapen with a reduction in the subsidized routes. But yes, if one accepts this program's outlays are everyone's responsibility, 25 cents on the dollar is cheap.

(I would like to see where the money goes each year. Marketing may not belong in this budget. It is good that the City is aiming this ballot at YVRA traffic rather than Mt Werner skier traffic.)

But your posts and the Pilot editorial do not address my main concern, and the challenge with this program - sustainability.

In 2005 Ski Corp couldn't carry the load and needed the some of the lodging community to step up with a 2% LMD lodging tax. (Note that that district was drawn to reach the right voters and doesn't include our downtown lodging. They should have spread the 2% to all the lodging properties.) Now, 6 years later, Ski Corp and those lodges can't carry the load.

Inevitably, the seats will decline. So should we grow the airline seats for a few years, build a few more condos and restaurants to meet that demand bubble, and then try and figure out how to keep this larger, false economy alive when the program's budget is $10 million a year?

So Vanguy, I’ve asked for something more responsible to those of us who will live here beyond your crash and exodus. I would readily support an air program that offers not some future crash, but rather a rational and steady transition into the coming reality of fewer airline seats.

Instead we have a $$ starved program committing itself to one of its largest contracts, if not its largest, and gambling on an increased number of visitors. I consider that irrational and precipitous behavior. Yes. Prepare for turbulence.

Steve,
Any good ideas on how Vail's program for flying into Edwards airport is able to have so many more flights and cost Vail Resorts so much less?

And if higher costs and fewer seats are inevitable then maybe we should plan for some commuter flights to DIA and a shuttle van to Edwards for their direct flights.

Looks to me like SB cannot compete on airline seats with Vail and so spending more to get less only further weakens our competitive position. So instead of competing we should use them to bring in our tourists on their subsidized flights.

And does anyone have the historical data of flights into YVRA vs how many used/empty vs cost of that year's airline subsidizes? Surely before putting a measure on the ballot that someone must have looked at that data.

Wait till you see the prices the airlines are charging to fly in and out of Hayden this ski season. $900 round trip from Chicago in January is an example. Talk about having empty seats and empty condos, we can't get people here if they can't afford to fly here.

Lewi, I have been paying attention to (and contributing to) the program for more than a decade. The guarantee is a revenue guarantee not a passenger count. If the fares are high enough the plane could fly half full and not trigger a payment. Conversely, if the fares are low enough, the plane could fly full and still fall short of minimum revenue and thus require a payment. In the past, there has been a constructive dialog about promotional fares to drive load factors and thus local revenue. The airlines have been good partners in this regard.

Scott, if you dig into the numbers, you will find that the airline subsidies for Eagle are several times what we pay here thanks to the participation of the entire Vail Valley and Aspen. (Aspen's airport is too unreliable, so most commercial air passengers for Aspen fly into Eagle) They have a different funding mechanism, but the funds they pay are much greater than what we are paying.... thus.... more seats.

We have encountered a perfect storm... lower demand for seats which raises the expense at the same time that revenues to pay for them is down. As things improve, both the load factors AND the revenue will increase. Thanks to the boom times of 2006, 2007, and into 2008 there was a surplus as we entered the recession. We have now burned most of that up... but that is why we had a reserve.

This program does benefit businesses indirectly, just as it indirectly benefits anyone who earns a paycheck in this town in almost any position. It is also a HUGE benefit to the local economy as air connections are crucial aspect of making Steamboat a viable location neutral address.

Regarding empty seats, it would be a wonderful thing if they were all full, but the nature of our visitor business means that there will NEVER be the same demand for seats the third week of January that there is over the Holidays or in Mid March. If we want the airline to commit an aircraft of a certain size to the route, we have to make that math problem work for the season. It is not practical for them to put a 250 seat aircraft on the run for the big weeks and ratchet down to a regional jet with 70 seats for the off weeks which is the only thing that would bring the load factors up for the whole season.

This is not about subsidizing empty seats. It is about having enough seats to take advantage of demand when it exists while not breaking the bank when things are slower. A complex puzzle to be sure.

Sodacreekpizza,
Vail overall does have a bigger subsidy because they sponsor flights in the low traffic shoulder seasons. Their fall flights are only 53% full which they consider acceptable as they are trying to encourage a higher volume of year round tourism.

But Vail Resorts pays all of the subsidies for their winter flights and their costs for winter are between $350K and $1M. Which is far less than SB's air subsidies while guaranteeing far more seats. So during the winter when Vail Resorts is responsible for making the guarantees and they are offering packages to skiers then they are doing a far better job than SB Ski Corp at filling seats.

I just wonder how much creative thought goes into working around the problem as the subsidies are going to need to be ever increasing, as fuel costs rise and they will continue to as long as the economic policies in DC foster an environment which requires the printing of money.

That said how do you step out off of the subsidy plane ride and keep some level of service, while at the same time utilizing the grey matter to figure out how to get more seats in the peak of the season and or give families that fly into Denver/Eagle and commute (can't be further from Eagle to Aspen than to Steamboat) a lodging/ticket credit.

Thinking that the world is going to end because the subsidy is not there, places less emphasis on the macro economic environment that is dictating the decline in tourism in SB. More seats is not going to mean more tourism.

There is also the need for realizing that an optimum number of seats are needed. More creates more business, but at what cost and is there a declining marginal return on investment on those seats.

What else can be done to encourage tourism in SB that is going to be more sustainable. The option of plane seats is only one facet in the game.

Lower lift ticket prices might encourage more nightly rentals. It is a complex equation and the debate is centered around only one facet of what brings an individual to Steamboat. Especially given that 80% of skiers arrive in a different manner than Hayden Airport.

Maybe we should focus on how to expand the days spent here by the other 80% of skiers and utilize funds to draw more of them for longer stays.

What happens if we have a drought next winter, does not matter how much the guarantees are, still will not draw tourists.

Though on their main page they have selected few markets which are closer together. Seems to me that would be a better way to go.

Then have the Ski area offer shoulder season passes in January to those from those markets for five day passes that do not require a stay in their hotel just an airline ticket stub be presented with a hayden destination - so that those you are targeting to get into the market via a regressive tax are the ones receiving benefit.

This way you are targeting those slow seasons in order to minimize empty seats and the exposure the program exposes to the general population.

If you are going to tie a discount pass to lodging that is not fair to all concerned, especially if you are thinking of taxing everyone because all will benefit. Some will not and this is a very regressive tax considering some arguments have been made as to why second homeowners have chosen to buy here.

How much is the subsidy? How much to buy a plane? Ask Branson, that's how he started Virgin Airlines. Seems to have been profitable for him. Someone in this town has to be smarter than me and can start a shuttle out of DIA. 80 dollars for Alpine Taxi (approx.) times 100 seats on a plane, can't cost 8,000.00 for jet fuel and a pilot for 45 mins work.

Continuing.
The grooming is ridiculous. I have yet to ski such poorly groomed slopes on another major mountain. This isn’t a big deal to me, and I am sure it has made me a better skier over the years, but it is huge to those who only ski once or twice a year. They want to have fun, and don’t want to fear for their lives or limbs. On the many foggy and flat light days in the past couple years The “grooming” is ridiculous. Again, it would be OK for a Mom & Pop resort but I these folks want the reassurance that if they are on a groomed run it isn’t going to have a grooming curb, a trench from the previous day or an unmarked stream that they can’t see. I have heard countless times skiers saying to their group “I know the grooming map said this was groomed, what happened??” Those who are not experts always head over to Wally World. But after a few hours the top is quite a mogul field. It instills fear into those who already are not confident. They are there to have fun! And this is the best place on the mountain for green skiers. Bashor was great, but it had to be turned into an area that is most of the time devoid of riders.
Several years ago I was in line for the Gondola. Two men were talking, one says to the other, “why would I want to spend my money coming back to this dump when we can be at a nice ski area”.
Last Feb. I was in a car and an older man announced that he was in the marketing or skier services dept. for Ski Corp and did anyone have any questions about the mountain. Someone asked him where they could get discount lift tickets like they could in the Front Range. He smugly said Steamboat was a destination resort and it didn’t have to discount tickets as there was no nearby competition. I replied that there was indeed competition, but the skiers made the decision before they arrived, by perhaps going somewhere else. Lift ticket prices are part of the package skiers look at when planning a vacation. He didn’t reply.
As I see it, the management of Steamboat, and they have been there a long time, is living in the past when Steamboat was up and coming, building and adding to the mountain. But now, most other resorts have passed Steamboat by in what skiers expect with their $100 lift ticket.
A ski vacation is a huge amount of money for anyone. But no amount of discounting flights or room nights or a quaint town will make up for what they come for – a great time skiing on a major mountain. And the dollars spent have to be comparable. More now than ever, skiers will be aware and looking for value. The mountain and the town have to work together, but the mountain is the initial draw, and they have to lead in giving the guests what they have learned and been told to expect.
I surly don’t want Steamboat to become an Aspen or Beaver Creek, but I would like to see the service become as great as the Champaign Powder and hear the visitors praising the resort more often.

I believe I read it in an article or the comment section of an article. So I may be wrong, but a large part of skiers arrive in another form of transit than an airplane.

I bet Scott has the numbers. But if you discount the ticket and make the stay less expensive then those who drive from KC, Texas or where ever for their ski vacation might just think Steamboat. Lots of people drive here from other parts of the country. When one considers that the airfare is the same as the cost of their multi day tickets, it does not take long to conclude that in these economic times people will figure out ways to cut costs so they can do what they want at a more affordable price.

Thus the question in the other thread that if airline passengers fell, what was the correlating question as far as to the number of rooms, skier days, etc..

Times are tight and not going to get any prettier for a while. So to conclude that the only option to maintain economic vibrance is the tax option is silly.

It also goes back to the question are we simply after more revenue as a community or is there a larger goal that we are after. The more revenue will always be looking for more at some cost of other facets in life.

Enough from me on the topic though. Just does not seem that those steering the ship are thinking very far outside the box. This is what used to work so we need to keep doing it. Many of the variables have changed and so what worked in the past might not work in the future.

By the way, it is this logic that concerns me. Sort of like an addicted gambler, well I can make my money back if I bet more. It is awful easy to place a bet that this is going to work if it is not your money.

--“It was Jan. 4, and we’d had a decent Christmas despite some frigid weather,” Diamond said. “We looked ahead at (reservations) pacing, and we were 6 percent off.

“I’m looking at the broader community and saying, ‘How the hell are we going to come out of this recession?’ It’s not going to be construction. It’s not going to be real estate. And summer is summer — we’re about as full as we can be,” Diamond said.--

If reservations were off 6% and capacity was off 13% from another pilot article then the correlation that we need more seats to encourage people coming to the boat may be unfounded. "memory from this morning on the figures - as i was trying to find the number of skiers who arrive via hayden as a percentage" might be wrong"

Though if you are going to propose a tax then all the facts and figures should be on the table such that you can really glean information as to what is going to put people in rooms and on the slopes. Airline seats may not be the only solution - however the correlating factor of seats to reservations, may/may not be what is needed to move the proverbial needle.

If town was full or close for Xmas, then adding more seats is not going to provide any benefit there. The question I would ask is how do you put people in rooms during the slower part of the year to limit the need for much of a guarantee.

I don't remember the precise source for the number that 80% of winter tourists get here other than on flights. I recall that it was a fairly straightforward analysis taking into consideration length of vacation (something like a bit more than 3 days) vs number of passengers - number of locals on flights vs number of lodging pillows occupied.

I recall there was an answer from either Ski Corp or the Chamber on the topic that most tourists do not arrive via air and their answer was that higher spending tourists arrive by air and so it is worthwhile.

Which means expanding the flight program faces the additional challenge of adding seats and filling those seats with similar high spenders or they'll see a reduction in amount of money spent per air tourist.

Properly managing airline subsidies is a tricky challenge and it most certainly is not a more seats the better sort of situation the Chamber, City Council or Ski Corp would have us believe.

BTW, SB is never full anymore. I've been here long enough to remember when SB was full and someone arriving looking for a room would be told to drive to Craig. But SB over the past decade or so has increased number of pillows available over 50% while the number of skier days has stayed about the same. Now there is always some rooms available. They may not always be the full variety of price points, but that is hardly being full.

The very deep fundamental issue facing SB winter tourism is that skiing is literally a dying sport. The average age of skiers is increasing by almost a year each year. Thus, the industry is failing at attracting new skiers and is living off of baby boomer skiers that are just now reaching the age when they stop skiing because of health issues. Worrying about flights is merely trying to more effectively feed from the corpse of the wealthiest baby boomers whom still ski.

Regardless, the very limited data being provided by Ski Corp, Chamber, City Council or SB Pilot to justify a sales tax hike is a continuing disappointment.

"If we lose our air service, we will be dealing with Economic Armageddon in Steamboat Springs"
Oh for Pete Sake get a grip. The world as we know it, will not end because SBS doesn't have enough seats on the airplane to bring visitors to primarily enhance profits at the ski mountain. However, a higher sales tax and higher lift ticket prices will discourage tourism and locals will suffer all around. Who thinks of this stuff? More taxation does not necessarily mean there will be more revenue. Helloooo.